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<br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />I. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br />. <br /> <br />NOTE 1. <br /> <br />Revenlle and Cost Recognition (continlled) <br /> <br />BERMELLO, AJAMIL & PARTNERS, INC. <br />AND SUBSIDIARY <br /> <br />NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <br />DECEMBER 31, 2006 AND 2005 <br /> <br />SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br /> <br />The asset "costs and estimated earnings in excess of billings on uncompleted contracts" <br />represents revenues recognized in excess of amounts billed. The liability "billings in excess <br />of costs and estimated earnings on uncompleted contracts" represents billings in excess of <br />revenues recognized. <br /> <br />Cas" a"d Cas" Eqllivalents <br /> <br />For purpose of the consolidated statements of cash flows, the Company considers all highly <br />liquid instruments purchased with a maturity of three months or less to be cash equivalents. <br />The Company places its cash with quality financial institutions. Such balances may <br />temporarily exceed at a given day the insured limits of the Federal Deposit lnsurance <br />Corporation due to the volume of daily cash activity. The Company has not experienced <br />any losses in such accounts. <br /> <br />Property and Equipment <br /> <br />Property and equipment arc carried at cost, less accumulated depreciation and amortization. <br />Depreciation is determined using the straight-line method over the estimated useful lives of <br />the assets. Amortization of leasehold improvements is determined using the straight-line <br />method over the lesser of the term of the lease or the life of the asset. Depreciation and <br />amortization is included in general and administrative expenses in the consolidated <br />statements of operations. <br /> <br />Estimated useful lives of property and equipment are as follows: <br /> <br />Asset <br />Computer and transponation equipment <br />Furniture and equipment <br />Leasehold improvements <br />Equipment held under capital leases <br /> <br />Life <br /> <br />3 - 5 years <br />5 - 7 years <br />Shaner of useful life or lease teml <br />5 - 7 years <br /> <br />Maintenance and repairs arc charged to expense as incurred; improvements and betterments <br />are capitalized. When items are retired or are otherwise disposed of, the related costs and <br />accumulated depreciation and amortization are removed from the accounts and any <br />resulting gains or losses are credited or charged to income. <br /> <br />-8- <br />